Review hints for first midterm

Review hints for first midterm - Review hints for first...

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Unformatted text preview: Review hints for first midterm. Key point: The best preparation for the exam is the practice multiple choice tests in the Study Guide. Things you should know: - Difference between MACRO and MICRO economics and examples- Concept of scarcity and how economics is about scarcity and its implications- The business cycle and its parts, what is happening to output and employment in the different phases- Positive versus Normative statements- Graphs and the slope of a line in a graph- GDP as C + I + G + (X M), definitions of each and relative sizes - The circular flow and the components of it, what the flows are- PPF, Production Possibility Frontier: idea of attainable and non-attainable, increasing opportunity cost on curved PPFs, opportunity cost as slope of the PPF, how economic growth shows in the diagram- Opportunity cost; comparative advantage means low opportunity cost producer [you have comparative advantage in an activity if your opportunity cost of it what you have to give up of...
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